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The UK annuity market is “quite restricted and limited” and constitutes a “deeply entrenched” industry whose interests are to keep promoting and maintaining the status quo, according to Kay Blair, vice chair of the Financial Services Consumer Panel.

In an interview with FTAdviser, she said that her personal view is that it has to be questioned whether annuities do offer real value for money as over the past two to three years the actual yield from annuities has “decreased markedly”

Ms Blair said: “I think if we are, as a society, trying to get younger people involved in pensions and getting people to engage in a savings agenda, there should be good products that deliver good value for money.

“I think it might be worthwhile to look at issues around the competitiveness of the annuity market and the value of the annuity market. Certainly in the UK there are lots of issues around the lack of advice in the annuity market and there are lots of challenges around the open market option.”

According to Ms Blair, the Financial Services Consumer Panel has just decided to make decumulation one of its “key priorities” to look in a lot more depth.

She said: “So much of the focus is on accumulation but now you have more people moving to defined contribution pensions and you have the government urging individual responsibility and trying to offload risk onto individual consumers.

“It’s really important that consumers have decent decumulation products at the end of it, so we are very keen to look at the annuity market and look at the options in more detail.”

Specifically, the panel wants to look at options about advice, charging, and also look at perhaps other alternative types of product.

Ms Blair added: “What can enthuse consumers more? I also think we have a deeply entrenched industry whose interests are to keep promoting the annuity market so maybe that needs to be challenged but that is my personal view.”